{"id":54686,"date":"2020-08-15T11:14:20","date_gmt":"2020-08-15T16:14:20","guid":{"rendered":"https:\/\/olduvai.ca\/?p=54686"},"modified":"2020-08-15T11:14:20","modified_gmt":"2020-08-15T16:14:20","slug":"heres-why-the-impossible-economic-collapse-is-unavoidable","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=54686","title":{"rendered":"Here’s Why the “Impossible” Economic Collapse Is Unavoidable"},"content":{"rendered":"

Here’s Why the “Impossible” Economic Collapse Is Unavoidable<\/a><\/h3>\n

This is why denormalization is an extinction event for much of our high-cost, high-complexity, heavily regulated economy.<\/i><\/p>\n

A collapse of major chunks of the economy is widely viewed as “impossible” because the federal government can borrow and spend unlimited amounts of money<\/b>\u00a0because the Federal Reserve can create unlimited amounts of money: the government borrows $1 trillion by selling $1 trillion in Treasury bonds, the Fed prints $1 trillion dollars to buy the bonds. Rinse and repeat to near-infinity.<\/p>\n

With this cheery wind at their backs, conventional pundits are predicting super-rebounds in auto sales and other consumption<\/b>\u00a0as consumers weary of Covid-19 and anxious to blow their recent savings borrow and spend like no tomorrow.<\/p>\n

As for the 30+ million unemployed–they don’t matter.<\/b>\u00a0Conventional analysts write them off because they weren’t big drivers of “growth” anyways–they didn’t have big, secure salaries and ample wealth\/credit lines.<\/p>\n

What this happy confidence in near-infinite money-printing and V-shaped spending orgies overlooks is what I’ve termed\u00a0denormalization<\/i>, an implosion of the\u00a0Old Normal<\/i><\/b>\u00a0so complete that the expected minor adjustment to a\u00a0New Normal<\/i>\u00a0is no longer possible.<\/p>\n

The “New Normal” Is De-Normalization<\/a><\/p>\n

We’re already in a\u00a0post-normal<\/i>\u00a0world because the expansion of globalization and financialization needed to fuel the\u00a0Old Normal<\/i>\u00a0has reversed into contraction<\/b>. This reversal is an extinction event for all sectors and institutions with high fixed costs: air travel, resort tourism, healthcare, higher education, local government services, etc. because their\u00a0fixed cost structures<\/i>\u00a0are so high they are no longer financially viable if they’re operating at less than full capacity.<\/p>\n

Only getting back to 70% of previous capacity, revenues, tax receipts, etc. dooms them to collapse.<\/p>\n

And there’s no way to cut their fixed costs without fatally disrupting all the sectors that are dependent on them.<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

Here’s Why the “Impossible” Economic Collapse Is Unavoidable This is why denormalization is an extinction event for much of our high-cost, high-complexity, heavily regulated economy. A collapse of major chunks of the economy is widely viewed as “impossible” because the federal government can borrow and spend unlimited amounts of money\u00a0because the Federal Reserve can create […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[24078,150,195,30187,538,6465,587,855],"class_list":["post-54686","post","type-post","status-publish","format-standard","hentry","category-economics","tag-charles-hugh-smith-2","tag-collapse","tag-debt","tag-denormalization","tag-money-printing","tag-new-normal","tag-of-two-minds","tag-viral-pandemic"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/54686","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=54686"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/54686\/revisions"}],"predecessor-version":[{"id":54687,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/54686\/revisions\/54687"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=54686"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=54686"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=54686"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}